Pricefx raises $65 million to optimize product and service pricing with AI
Pricefx, a company developing automated product and service pricing optimization software, today announced that it raised $65 million. A spokesperson said the new funding will be used to expand Pricefx’s global presence, accelerate product development, extend its partner ecosystem, and evaluate acquisitions like its purchase of AI pricing startup Brennus Analytics in May 2019.
Getting pricing right is critically important to business success. According to a McKinsey & Company report, a 1% price increase translates to an 8.7% increase in operating profits on average, yet an estimated 30% of pricing decisions fail to deliver the best prices. Pandemic-related developments have increased the demand for automated solutions, with pricing software seeing a surge in interest owing to the strong return on investment even in downturns.
Firms like Pricefx, which was cofounded in 2011 by former Accenture consultant Dr. Martin Wricke, Ariba veteran Marcin Cichon, and programmer Christian Tratz, offer a dynamic alternative to “tried and tested” historical pricing methods. The Munich-based startup (with offices in the Czech Republic, Switzerland, and Australia) provides a software-as-a-service solution for price optimization that taps AI to suss out business-to-business and business-to-consumer product pricing, an approach that’s evidently impressed the investors who continue to throw money its way.
Pricefx’s cloud-hosted, modularized platform connects to apps and algorithmic libraries to analyze and manage pricing. The company’s PriceAnalyzer tool delivers visualizations and reports that spotlight underperforming products, accounts, and marketing programs, while a separate component — PriceOptimizer — leverages machine learning and data science techniques to test various pricing strategies, segments, volumes, and margins. Another tool, PromotionManager, allows customers to define, create, and manage discounts and pricing offers, complementing the QuoteConfigurator service that feeds optimized quotes to customer relationship management systems.
Pricefx’s RebateManager lets companies manage rebate processes from a single dashboard, and its PFX Platform product connects its SaaS-based pricing solutions to existing ecommerce and enterprise resource management systems. ChannelManager offers a ship and claims management workflow designed to work seamlessly with current tech stacks. And Lightning, which launched in the past few months, provides a suite of standard pricing analytics and configure-price-quote (PCQ) management tools able to go live in six weeks or less.
Pricefx, which last year expanded its footprint in Chicago and hired on 40 employees, claims it signed on more than a dozen new customers since March of this year and hit over €15 million (~$16.9 million) in annual recurring revenue. The company’s over 100 clients in 37 countries include Michelin, Schneider Electric, Spinner Group, and some of the largest manufacturing, retailing, and energy businesses in the world.
Analysts at Gartner anticipate the price optimization and management market will grow rapidly in the next three years, and competition abounds. There’s Qualtrics, maker of CoreXM; BlackCurve, which claims to boost profitability by 9%; and Prisync, netRivals, and Competera. But cofounder and CEO Cichon says Pricefx’s product diversity sets it apart from the rest. Later this year, the company plans to introduce a self-service version of its analytics software as well as industry-specific Accelerator packages, enhanced CPQ functionality, and an AI-enhanced version of PriceOptimizer.
Pricefx’s series C round was led by Apax Partners’ Apax Digital with participation from existing investor Digital+ Partners. It brings the startup’s total raised to date to $130 million following an extended $25.3 million series B round in November 2019 at triple its valuation in 2018. As a part of this round, Apax Digital’s Mark Beith and Daniel O’Keefe will join Pricefx’s supervisory board.
“Over the last six months, we’ve seen pricing become increasingly important to businesses across the globe, and we’ve proven again that our fast, flexible, and friendly cloud-based pricing solution provides a path towards growth, even when times get tough,” Cichon told VentureBeat via email. “This latest investment will keep that vision moving forward as we continue to innovate for more customers, grow our partner ecosystem, add the industry’s best talent to our exceptional team, and invest in more strategic acquisitions.”
Pricefx has 370 full-time employees today and says it’ll look to add more than 100 new roles over the next 12 months.